×

BREAKING NEWS: CNBC TRANSCRIPT: CNBC'S DYLAN RATIGAN TALKS TO NEW YORK DEMOCRATIC SENATOR CHARLES SCHUMER REGARDING CITI MORTGAGE DEAL AND CLAWBACKS FOR EXECUTIVE PAY TODAY ON CNBC'S "FAST MONEY"

Senator Chuck Schumer
AP
Senator Chuck Schumer

WHEN: TODAY, THURSDAY, JANUARY 8TH AT 5:00PM ET

WHERE: CNBC'S "FAST MONEY"

Following is the unofficial transcript of CNBC's Breaking news interview with New York Democratic Senator Charles Schumer on CNBC's "Fast Money." During the interview with CNBC's Dylan Ratigan, Schumer tells CNBC's "Fast Money" he is hopeful there is a chance a mortgage deal could make it into the Obama stimulus package as well as he and others in Washington, DC are looking into clawbacks for executive pay (excerpt below followed by complete unofficial transcript).

Dylan Ratigan: Is there any conversation at this point or do expect there to be conversation this year about clawbacks for the CEO, bank CEO's and the bonuses the past few years associated with all the business practices that we discussed.

Senator Schumer: Yes. The answer is yes. I think there's a real thirst, not only in the congress, but in the public to deal with this issue and people who made record, you know, they sort of made all these high salaries at a time when their business was doing great but it was house of cards, should now pay a price when the business is doing poorly.

Complete transcript available below.

All references must be sourced to CNBC'S "Fast Money."

***********************************************************************

DYLAN RATIGAN: WE SWITCH GEARS TO THE MORTGAGE STORY AGAIN. IT WAS A TWO-STORY DAY. RETAIL, WE JUST DISCUSSED AND WE'LL REVISIT THE NEWS ON MORTGAGES. WE ARE FORTUNATE ENOUGH TO BE JOINED NOW BY SENATOR CHUCK SCHUMER. DEMOCRATIC SENATOR, WELCOME BACK TO THE PROGRAM AND THANK YOU FOR GIVING US A SLICE OF YOUR EVENING. WALK US THROUGH IT AND THERE'S A LOT OF CRITICISM OBVIOUSLY TO GO AROUND THE TOTALITY OF THE HOUSING SITUATION, HOW IT CAME TO BE AND HOW WE'RE TRYING TO GET OUT OF IT. THE PROBLEM I FIND IS WHEN PEOPLE CRITICIZE IT THEY RARELY CAN GIVE ME A BETTER ALTERNATIVE TO WHAT'S HAPPENING.WITH THAT SAID, I PRESUME YOU'VE LOOKED A LOT OF DIFFERENT WAYS AT THIS. THERE'S LOTS NOT TO LIKE, AND TAXPAYERS END UP PAYING FOR THIS, THAT AND THE OTHER THING, WHY DO YOU FEEL THIS IS THE BEST POTENTIAL OPTION RIGHT NOW TO TRY TO REDUCE FORECLOSURES.

SENTAOR CHARLES SCHUMER: SIMPLY PUT, DYLAN, TO REDUCE FORECLOSURES YOU NEED BOTH A CARROT AND A STICK. SECRETARY PAULSON, SENATOR DODD AND CONGRESSMAN FRANK HAVE TRIED THE CARROT, BUT THE CARROT WITHOUT THE STICK WON'T WORK. THE CARROT IS SWEETER TERMS FOR MORTGAGES, BUT THE STICK WHICH IS WHAT BANKRUPTCY FORECLOSURE WOULD ALLOW IS TO REQUIRE THE TRANCH HOLDERS TO COME TO THE TABLE AND NEGOTIATE. WHAT WE HAVE SO FAR IS WE HAVE A MORTGAGE CHOPPED IN 40 TRANCHES. IF 39 SAID WE'LL RENEGOTIATE THE MORTGAGE BUT THE 40 SAY NO BECAUSE IT'S NOT IN MY FINANCIAL INTEREST BECAUSE I'LL LOSE MY MONEY THEN YOU'RE NOT GOING TO GET ANYWHERE. BANKRUPTCY SAYS TO THE 40th, IF YOU DON'T NEGOTIATE YOU'LL BE IN BANKRUPTCY COURT AND LOSE EVERYTHING, AND IT'S THE ONLY WAY PERMITTED BY THE CONSTITUTION TO ALLOW CONTRACTS WHICH EXIST BETWEEN THE MORTGAGOR AND EACH OF THE TRANCHE HOLDERS TO BE OVERCOME SO THIS IS A REAL BREAKTHROUGH, AND I WANT TO SAY A COUPLE OF THINGS ON THAT. FIRST, I WANT TO PRAISE CITI GROUP. THEY HAD THE COURAGE TO DO WHAT MANY BANKERS KNOW WAS THE RIGHT THING.I'VE BEEN TALKING TO THE HEADS OF THE MAJOR BANKS SINCE THE SUMMER AND I SAID IT'S IN YOUR INTEREST TO BE FOR THIS BANKRUPTCY REFORM PARTICULARLY IF IT'S NOT PROSPECTIVE, BUT IF IT'S ONLY RETRO ACTIVE AND WE'LL DEAL WITH THE EXISTING BAD MORTGAGES, BUT WON'T AFFECT THE NEW MORTGAGES IN THE MORTGAGE MARKET THAT WILL COME FORWARD. THEY SORT OF KNEW IT, BUT BECAUSE SO MANY OF THE SMALLER BANKS WEREN'T SUFFERING AND DIDN'T WANT TO DO IT FOR INDUSTRY SOLIDARITY, MOST OF THE INDUSTRY STAYED THERE.WHAT'S HAPPENED IS THE ECONOMY HAS OVERWHELMED THAT SOLIDARITY, CITIBANK'S MOVE TODAY BROKE THE DAM AND I NOW EXPECT THE BANKING INDUSTRY TO BE SUPPORTIVE OF THIS BANKRUPTCY PROVISION AND THERE'S A REAL CHANCE WE COULD GET IT IN THE STIMULUS BILL.

DYLAN RATIGAN: SENATOR, FOR THE TAXPAYER WHO LOOKS THAT THE AND SAYS WE ARE STILL ULTIMATELY BAILING OUT PEOPLE WHO TOOK MORTGAGES OUT FOR HOMES THEY BEING NOT AFFORD. THE WHOLE LENDING PRACTICE AND LOANS WERE MADE THAT SHOULD NEVER HAVE BEEN MADE AND NOW THE TAXPAYER IS DEALING WITH THE BURDEN OF THAT REALITY, TOO. TO THOSE WHO CRY THAT OUT WHEN THEY HEAR NEWS LIKE THIS HOW DO YOU RESPOND?

SENATOR SCHUMER: DYLAN, THIS HAS NOTHING TO DO WITH THAT. THE BANKRUPTCY PROVISION WILL NOT COST TAXPAYERS A NICKEL.

RATIGAN: INDIRECTLY -- IT DOES, THOUGH, NO?

SENATOR SCHUMER: HERE'S WHAT IT DOES. HERE'S WHAT IT DOES. IN THE OLD DAYS IF A MORTGAGOROR COULDN'T PAY HIS MORTGAGE, SOMEONE LOST THEIR JOB OR GOT ILL, THE BANK WOULD RENEGOTIATE. IT'S IN THE BANK'S INTEREST TO RENEGOTIATE BECAUSE THE BANK WOULD BE REPAID. IT'S IN THE MORTAGOR'S INTEREST TO RENEGOTIATE BECAUSE THEY'LL HAVE TO PAY MORE IN THE LONGER TERM, BUT THEY'LL HAVE TO PAY MORE, BUT THEY'LL KEEP THEIR HOME, BUT IN THIS NEW WORLD WHERE THE MORTGAGE IS CHOPPED UP IN 40 PIECES THERE'S NO CENTRALITY AND WHAT THE BANKRUPTCY DOES, IN EFFECT, IS RESTORE THE ABILITY TO RENEGOTIATE MORTGAGES WHICH WE'VE DONE --

RATIGAN: IN A TRADITIONAL --

SCHUMER: WHICH WE'VE DONE TRADITIONALLY FOR A VERY LONG TIME WITH NO ONE HOLLERING YOU SHOULDN'T DO IT. YOU SHOULD LET ANYONE WHO CAN'T REPAY THEIR MORTGAGE GO UNDER. THIS IS A WIN, WIN, WIN, IT'S A WIN FOR THE MORTGAGOR, THAT IS TRUE BECAUSE THERE WILL BE NEGOTIATION, IT'S A WIN FOR THE BANKS AND MOST OF ALL IT IS A WIN FOR THE ECONOMY FOR THIS SIMPLE REASON. YOU WILL NOT SOLVE THE PROBLEM OF INSTITUTIONS NOT LENDING UNTIL YOU GET A BOTTOM TO THE HOUSING MARKET.YOU WILL NOT GET A BOTTOM TO THEHOUSING MARKET UNTIL YOU DEAL WITH THE FORECLOSURE PROBLEM AND YOU WILL NOT DEAL WITH THE FORECLOSURE PROBLEM UNTIL YOU HAVE THE BANKRUPTCY. IT'S A VERY SIMPLE EQUATION.

RATIGAN: UNDERSTOOD.

JEFF MACKE: HERE'S THE ISSUE, FROM AN INVESTING PERSPECTIVE. THERE'S BEEN A LOT OF TALK ABOUT INVESTORS REGAINING TRUST IN THE MARKET. NEAR AS I CAN TELL, THE RULES FOR CITIGROUP IN PARTICULAR KEEP CHANGING. I'M NOT POSITIVE WHAT BUSINESS THEY'RE IN. I KNOW THEY KEEP GETTING MONETARY INJECTIONS FROM THE GOVERNMENT AND THAT'S HAPPENED AND NOW THEY'RE IN THIS BUSINESS. ALL THESE GUYS AREN'T CREATED EQUAL.IF I'M SITTING IN ANOTHER BANK THAT'S NOT CITY, IT'S NICE THAT THEY'RE DOING THIS.

SCHUMER: YOU DON'T GET WHAT HAPPENED TODAY. THIS DOESN'T AFFECT CITIGROUP. THE ONLY WAY YOU CAN CHANGE BANKRUPTCY IS BY LEGISLATION. THE BANKRUPTCY COURT IS NOT ALLOWED TO DO ANYTHING FOR CITIGROUP OR ANYONE ELSE UNTIL YOU CHANGE THE LAW. WHAT CITIGROUP HAS DONE TODAY IS THEY WILL SUPPORT THE CHANGE IN THE LAW. THAT WILL BRING OTHER BANKS ONBOARD. WE WILL GET THE LAW CHANGED AND IT WILL HELP MAKE US WELL. EVERY MAJOR ECONOMIST YOU SPEAK TO, RIGHT, LEFT AND CENTER SAYS THIS IS ONE OF THE KEY WAYS TO SOLVE THE HOUSING PROBLEM. DYLAN ASKED AT THE BEGINNING, COME UP WITH A SOLUTION. THIS IS A SOLUTION AND THIS HAS NOTHING TO DO WITH BEING SPECIFIC FOR CITIGROUP. THIS IS LEGISLATION THAT WILL EITHER AFFECT EVERYONE OR NO ONE.

RATIGAN: ONE LAST QUESTION ON THIS AND I HAVE ONE OTHER QUESTION FOR YOU. I KNOW I'M RUNNING THE CLOCK AND SO ARE YOU FOR THAT MATTER AT THIS POINT. WHAT IS YOUR ASSESSMENT AND WHEN YOU DID THE RESEARCH ON THIS AND THE RESEARCH THAT YOU'VE SEEN COME IN, WHAT PERCENTAGE OF FORECLOSURES ARE ECONOMISTS AND POLITICIANS AND BANKERS FOR THAT MATTER SPECULATING CAN BE AVERTED OR HONED AS A RESULT OF THIS LEGISLATION?

SCHUMER: PROBABLY ABOUT 60 OR 70%. HERE'S THE INTERESTING THING. HALF OF ALL SUBPRIME BORROWERS ARE PRIME LENDERS. THEY REPAY. THEY WERE GIVEN A BAD DEAL. WE CAN DECIDE WHO TO BLAME AND THAT WON'T GET US ANYWHERE, BUT THEY HAVE THE ABILITY TO REPAY A MORTGAGE, PLAIN AND SIMPLE. UNTIL NOW THE SYSTEM WAS PARALYZED.

RATIGAN: WE BOTH HAVE TO GO. I HAVE ONE LAST ONE FOR YOU AND I'LL LET THIS THING GO, COMPLETELY UNRELATED TO THIS. NEWS TODAY, BUT IN THE CONTEXT OF THE BANKING SYSTEM AND THE NARRATIVE THAT WE ARE ALL INTIMATELY FAMILIAR WITH, IS THERE ANY CONVERSATION AT THIS POINT OR DO YOU EXPECT THERE TO BE CONVERSATION THIS YEAR ABOUT CLAWBACKS FOR THE BANK CEOs AND THE BONUSES OF THE PAST FEW YEARS ASSOCIATED WITH ALL THE BUSINESS PRACTICES THAT WE'VE DISCUSSED.

SCHUMER: THE ANSWER IS YES. I THINK THERE'S A REAL THIRST, NOT ONLY IN THE CONGRESS, BUT IN THE PUBLIC TO DEAL WITH THIS ISSUE, AND PEOPLE WHO MAKE RECORD -- YOU KNOW, THEY SORT OF MADE ALL THESE HIGH SALARIES AT A TIME WHEN THEIR BUSINESS WAS DOING GREAT, BUT IT WAS A HOUSE OF CARDS SHOULD NOW PAY A PRICE WHEN THE BUSINESS IS DOING POORLY.

RATIGAN: RIGHT. SENATOR, A PLEASURE. I HOPE YOU WILL REJOIN US AGAIN SOON.

SCHUMER: HAPPY NEW YEAR.

RATIGAN: YOU AS WELL. WE'LL TAKE A BREAK AND WE'LL BE BACK.



About CNBC:
CNBC is the recognized world leader in business news, providing real-time financial market coverage and business information to more than 340 million homes worldwide, including more than 95 million households in the United States and Canada. The network's Business Day programming (weekdays from 5:00 a.m.-7:00 p.m. ET) is produced at CNBC's headquarters in Englewood Cliffs, N.J., and also includes reports from CNBC news bureaus worldwide. Additionally, CNBC viewers can manage their individual investment portfolios and gain additional in-depth information from on-air reports by accessing http://www.cnbc.com.

Members of the media can receive more information about CNBC and its programming on the NBC Universal Media Village Web site at http://nbcumv.com/cnbc/.